Ferguson Enterprises Inc. has reported its second-quarter results, revealing continued volume growth in challenging markets. The company reported sales of $6.9 billion, a 3.0% increase, driven by market outperformance. Sales volume grew by 5%, partially offset by continued deflation of approximately 2%.
Gross margin came in at 29.7%, down 70 basis points from the prior year, and the operating margin was 6.0% (6.5% on an adjusted basis). Diluted earnings per share were reported at $1.38 ($1.52 on an adjusted basis), marking a decrease from the previous year.
The company also declared a quarterly dividend of $0.83, reflecting a 5% increase over the prior year. Additionally, Ferguson completed one acquisition during the quarter and signed a definitive purchase agreement to acquire a leading commercial/mechanical distributor in the northeast.
The balance sheet remains strong, with net debt to adjusted EBITDA of 1.2x. Share repurchases during the quarter totaled $252 million, and the share repurchase program was increased by an additional $1.0 billion.
Ferguson's CEO, Kevin Murphy, commented on the results, noting the company's continued market outperformance and the need to navigate a unique time with subdued markets and persistent commodity price deflation.
Looking ahead, the company has reaffirmed its full-year revenue guidance of low single-digit growth but updated the expected full-year adjusted operating margin range to 8.3% to 8.8%.
In terms of specific financial metrics, net sales for the second quarter were $6,872 million, a 3.0% increase from the previous year. Gross margin stood at 29.7%, down from 30.4% in the previous year, and operating profit was $410 million, down 14.0% from the prior year.
In the US business segment, net sales increased by 3.0%, with organic revenue growth of 2.0% and a further 1.0% contribution from acquisitions. Adjusted operating profit for the US segment was $455 million, 13.3% lower than the previous year.
In Canada, second-quarter net sales grew by 3.2%, with organic revenue growth of 3.1% and a 5.4% contribution from acquisitions. Adjusted operating profit for the Canadian segment was $11 million, $2 million above the previous year.
The financial position of the company remains strong, with net debt to adjusted EBITDA at 1.2x as of January 31, 2025. Share repurchases during the quarter totaled $252 million, and the company extended its share repurchase program by an additional $1.0 billion, resulting in a remaining outstanding balance of approximately $1.4 billion.
The company declared a quarterly dividend of $0.83, representing a 5% increase over the prior year. As a result of these announcements, the company's shares have moved -4.3% on the market, and are now trading at a price of $158.41. For the full picture, make sure to review Ferguson Enterprises's 8-K report.
